12-22-2021 HUCMMINUTES
Regular Meeting — Hutchinson Utilities Commission
Wednesday, December 22, 2021
Ca;l�l to order — 3:00 p.m.
President Matt Cheney called the meeting to order. Members present: President Matt
Cheney; Vice President Anthoon, Secretary Don Martinez; Commissioner Monty
Morrow; Commissioner Robert Wendlorff ; GM Jeremy Carter; Attorney Marc Sebora
1. Conflict of Interest
2. Approve Consent Agend,?
a. Approve Minutes
bi. Ratify, Payment of Bills
Consent Agenda, Motion carried unanimously.
3. Approve Financial Statements
Mr. Martig presented the financial statements., Electric D�iv,ision Net Loss increased
by $42K with increased revenues but increased operating expenses as, well.
Purchased'! Power and Fuel ' were the largest expense increases due to increased
usage. Overall running very similar to budget. Gas Division Net income increase by
$79K with increased revenue, and usage. Customers were charged an additional
$61 K as opposed to a credit of $,51 K a year ago which is why revenues were up a
much higher percentage than usage.
Commissioner Hanson iln,quired about the Rate Stabilizatiod in both Gas and
Electric,
GIVI Carter noted the natural gas rate stabilization fund is back up to $546K and is
running on track to be back up to $60,OiK by the end of calendar year 2021. GM
and
Market prices.
GM Carter noted or November that were pushed back.
Motion by Commissioner Hanson, second by Commissioner Wendorff'to approve
the financial statements. Motion carried unanimously.
5. Communication
a. City Administrator — Matthew Jaunich —
L Budget and tax season.
ii. Council is, expected to approve a 4.2% Tax levy increase- part in relation, to
the Police Department
b, Divisions
i. Dan Lang, Engineering Services Manager — INothingl to report
iii. Dave Hunstad, Electric Transmlissioni/Distribution Manager — Nothing to,
report
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iii, Mike Gabrilelson, Production Manager — Nothing to report
Jared Martig, Financial Manager —
1. Auditors are booked for week of January 24
2. Disconnects are down
v. John Webster, Natural Gas Di�vision Director — Nothing to repol
d. Legal — Marc Sebora —
e. General Manager — Jeremy Carter —
6. Policies
a. Review Policies
No changes recommended at this time
8. New Business
At this time, President Cheney recognized Commissioner Morrow for all that he has
done over the years for the Hutchinson Utilities Commission. All Commissioners
and Staff also thanked Commissioner Morrow for his time and, work. Commissioner
Morrow thanked the Commissioners and Staff as well.
President Cheney recognized and welcomed new Production Manager Mike
Gia,brielson,
31. a. Approve Requisition #8971-WSB Engineering Assistance of Integiri
Assessment of High Consequence Area i
Mr. Webster presented Requisition #8971-WSB Engineering Assistance of
Integrity Assessment of High Consequence Area. The Natural Gas Division is
required to perform an Integrity Assessment of the High, Consequence Area
segment on the 12-inch natural Nas lateral near Hutchinson by July 2022. WS
will provide the; recommendations on tool vendors, tool types and specificationli
along with other items neededto be completed. Final cost of engineering
assistance is dependent on timing of length oonifirmatory digs on pipeline.
Motion by Commissioner Hanson, second by Cornimissioner Morrow to Approve
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Consequence Areai. Motion carried unanimously.
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GM Carter provided an overview of the Compensation Study Results that were
received from Bakerti�ll�y, As HU'C has moved the grid and had Union Contracts,
the overall summary shows that HU'C is keeping pace with the peer group. GM
Carter noted that there a,re a few positions +- above and below 5i% but these ar
in line from past Compensation Studies. HUC is behind on accrual balances bu
nothing of significance along with vacation being below average on the front en
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For Health and Dental Insurance, HUIC is one of the few with a high deductible
plan; employee and employer splits are faidy similar, along with some utilities
offering vision plans. At one time HUC was one of the only groups to have HS
that is not the case anymore. Overall, HUC is, within market with the exceptio j n
accruals.
GM Carter reviewed the Union Negotiation Summary on what articles were
looking to be changed during the negotiation process. Looking to settle on a 2-
year contract, at a 4% ourly pay increase each year. Other articles in the
contract that look to be changed are the stand by pay, Christmas Eve holiday pay
when Christmas falls on a, weekend, along with asking the Board to move to
weekly accruals on both union and non -union.
Commissioner Martinez and President Cheney both commented that overall the
negotiation process went well.
Ms., Brenda Ewing noted that the Memorandum of Health Care Savings is still
under review by MSRS and that can be approved at a future meeting
Motion by Commissioner Hanson, second by Commissioner Wendoirff to approv6
the Union contract January 1, 2022 — December 31, 2023. Motion carried
unanimously.
V. Approve 2022 Pay Grid.
GM Carter presented the Approval of the 2022 Pay Grid. GM Carter recapped
:iiscussions that were held in previous months with the Commission. GIVI Carter
stated that HUC annually considers a market adjuistme,nt to the cuirrent pay grid
based on market statistics. GM Carter reviewed the statistical findings. Based on
the findings, the recommendation would be for the non -union pay grid for 2022 to
incorporate a 4% grid shift.
Commissioner Hanson noted a 4% increase to the griid is fine but also inquired
about the inconsistencies with the top end of the GM grade position that shows a
max amount that, is something that is not allowable based on the culirrent position
of the Governor's salary cap. Is this something that should be noted on the grid
to create some type of consistency.
GM Carter stated the need to make sure that intemal equity is kept consistent
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between grades of positions. If a level is changed the same consistency has to
be followed through all the levels. A Compensation study looks at the market
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iiata and the internal equity and where the levels are at and miaking sure all levels
are spaced appropriately; this allows the Board and Organization to move people
and change posWons during a reorganization.
Commissioner Hanson looked to Ms. Ewing and Mr, Sebora to see i: there are
any concerns with, approving the Pay Grid as presented and knowing that the
intention is not to exceed the Governor's salary cap.
Mr. Sebora stated there is no li�abi�li�ty in having the grid as presented just so the
GM salary does not pay over the governor's sailary cap.
After discussion, it was noted to continue to monitor this situation.
Motion by Commissioner Wendorff, second by Commissioner Hanson to approve
the 2022 Pay Grid. Motion carried unanimously.
UMEM
GM Carter presented for approval the 2021 Budgets & CIP. At the November 24,
2�021, Commission meeting a high-level overview of the 2022 budgets were
reviewed and major changes budgeted from 2021 to 202�2 were discussed in
detail�. Since that time, some additions and reductions have been made on the
revenue/expense side of the 2022 Electric Division operating budget reflected in
the final budgets. 'These changes iinclude PCA revenue (increase of $100,000),
Generation Fuel Budget (Increase of $192,,930), Distribution and
Repairs/Mainteinance (increase of$40,,000), Production Elevator Repairs
(increase of $73,000), MISO Purchases (decrease of $97,043), and
Machinery/Boiler Insurance (decrease of $10,101). G,M Carter stated on the 5
Year CIP there was a minor expense change of $2K in the production area.
Commissioner Hanson noted that the 2022 Budgets and CIP were very well
thought out and; presented along with being consistent with the expectations of
the Commission, The Commissioners agreed.
Martinez to Approve the 2022 Budget and CIP. Motion carried unanimously.
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GM Carter started the conversation on the current No,n-Uniion Vacation Policy. For
the most part, the new non -union vacation policy would mirror what is currently in
the u!niion contract. There are three adjustments that Staff would like the
Commissioners to considerer: 1) Move the vacation to bi-weekly accruals, versus a
lump sum added on an employee's anniversary date, 2) Have the max accrual
balance carry-oiver transition from an employee's anniversary date to the end of the
calendar year, and 3) Increase the annual accrual rate to 2 times an employeie's
annual accrual rate. Currently the union contract only allows 40 hours of carry over
and the non -union a,llolws one times an employee's aninual accrual. HUC would look
to, transition this direction over the next two caileindar years to, ensure no employee
loses any of their vacation balances. The only difference on the non -union vacation
policy that is being proposed is an additional pay -out option not to exceed 40 hours
if an employee can!'t use all their vacation in a calendar year if a minor extension of
time doesn't work.
GM Carter noted at the very least Staff is looking to approve the bi weekly accruals,.
Discussions were held on the aidjustments, concern over the payout option, the
flexibility it creates and the accrual on the books,
After discussion, a motion by Commissioner Martinez, second by Commissioner
Wendorff to Approve the Non -Union Vacation Poilicy Accrual as presented.
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Motion carried unanilmously,
President Cheney introduced the agenda item, the General Manager's annual
performance review, President Cheney advised GM Carter that he has the option to
have the performance review conducted as either an open, session, or a closed
session of the Utility Commission. GM Carter indicated his decision to have the
review as part of a closed session,
President Cheney entertained a motion to go into closed session to conduct the
twelve-month (annual,) performance review as permitted under Minnesota Statute
13D.05, Subdivision 3,(a), Motion by Commissioner Hanson, second by
Commissioner Morrow to go into closed session to conduct the General Manager's
performance review. The motion passed unanimously. The Commission then
proceeded into a closed session at 4:15 p.m.
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Hutchinson Utilities Commission
Summary of Closed Meeting Proceedings
General Manager Performance Appraiisal
On December 22, 2021, the Hutchinson Utilities Commission conducted a closed meeting for the
annual performance appraisal for General Manager, Jeremy Carter. Individuals present included
General Manager Jeremy Carter, Commission, Members Mat Cheney, Don Martinez, Monty
Morrow, Anthony Hanson, and Bob Wenclorff, City Attorney Marc Se,b,ora, and City of Hutchinson
Human Resources Director Brenda Ewing. Mr. Carter exercised his right to close the proceedings
to the publlic as permitted under Minnesota Statute 13D,.05, Subdivision 3(a).
Motion by Anthony Hanson, second by Monty Morrow to go into closed session to conduct the
General Manager's performance review. The motion passed unanimously. The Commission then
proceeded into a closed session at 4:�15 p.mi.
The Commission reviewwedl Mr. Carter's performance for the current calendar year. The review is
required per the terms of the employment contract in place between the Hutchinson Utilities
Commission and General Manager Carter.
Mr. Carter's performance was evaluated in the following areas: Organizational Management,
Fiscal/Business Management, Program Development, Relationship & Communication with the
Commission, Long -Range Planning, and Relationships with Public & Outside Organizations, The
consensus of the Commission its that Mr. Carter's cumulative performance for the review period
was found to be 3.89 on the rating scale of 0 — 5, and, per the Hutchinson Utilities, Commission,
is outstanding on the ratings scale.
The employment contract between Hutchinson Utilities and Mr. Carter indicates that salary
increases for the General Manager are subject to the provisions of the Compensation Plan, section
of the Hutchinson Utilifles Commission Exempt Employee Handbook,
Motion by Martinez, second by Hanson to close the closed session. The motion passed
uniainimiously. The Commission moved back into open session at 5:45 p.m:,
Motion by Hanson, second by Martinez to establish the aggregate review score of 3,891 to
increase General Manager Jeremy Carter's annivail salary to $188,164.08. The motion carried,
unanimously.
Motion to adjourn by Morrow, second by Wenclorff
unanimously, and the meeting adjourned at 5:47 p.m.
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to adjourn. The motion carried
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ATTEST:
Matt Cheney„ President